Budget smartphone memory costs are now threatening to shrink one of the consumer electronics industry’s largest segments, as surging RAM prices make low-end handsets increasingly unviable for manufacturers and unaffordable for buyers.
Budget Smartphone Memory Costs: What Omdia Found
The pressure is documented in analysis published on 7 July 2026 by global technology research firm Omdia, which found that memory costs now account for nearly 60% of the total bill of materials for smartphones in the sub-$400 tier, and more than 64% for phones priced below $99.
‘Memory costs have become a serious burden for low-end smartphones,’ the firm said. ‘Based on the memory price trend for the coming quarters, low-end products are already becoming unprofitable and face a high risk of weakening demand as retail price continues to rise.’
Omdia expects the global smartphone market to decline by 12% this year, driven largely by a 22% year-over-year decline in shipments of sub-$400 devices. Shipments of phones above $400 are forecast to grow by 5.7%.
The asymmetry matters because of how little room budget makers have to manoeuvre. A premium manufacturer can swap in an older processor, a cheaper display, or a simplified camera module. A brand competing on price, already working on thin margins, has far fewer components to cut.
Global consumer tech brands, including Chinese names such as OPPO and Xiaomi, are under pressure to raise retail prices to protect margins, Omdia said. Budget smartphone memory costs are driving that pressure more than any other input.
A Wider Hardware Squeeze
The same memory supply chain feeding consumer smartphones also supplies AI data centre construction, where DRAM and NAND demand has surged. That overlap is pushing up costs across consumer electronics well beyond handsets.
Apple raised prices on many Macs and iPads by as much as $300 after Tim Cook said the memory shortage had become too expensive to absorb. iPhone prices have not yet risen, though many industry observers expect the starting price of the next generation to increase when new models are unveiled in the autumn.
Microsoft is raising Xbox console prices by $100 to $150 from 1 August 2026, with the Xbox Series X reaching $800, according to The Next Web. The Xbox Series S 512GB will rise from $399.99 to $499.99, and the Series S 1TB from $449.99 to $599.99, Savepointgaming reported. Microsoft said memory and storage costs had already risen by more than 2.5 times and could climb again.
The August increase is Microsoft’s third in 13 months: the company previously raised Xbox prices between $80 and $100 in May 2025, then again between $20 and $70 in October 2025 (in the US only), according to Yahoo Finance, citing GameSpot. Microsoft is also discontinuing its 2TB Xbox console models as part of the same round of changes. To cushion the blow, the company is introducing Buy Now, Pay Later options, interest-free financing, a Certified Refurbished Consoles programme offering up to $100 off, and a previously-played consoles option.
Valve announced a $1,049 starting price for its Steam Machine living room PC. Dell and Lenovo raised prices between 15% and 20% in December and January.
Retailers are not insulated either. Currys, Britain’s largest electronics retailer, posted an 18% rise in profit for its 2025/26 financial year and described trading at the start of its new financial year as ‘very solid,’ according to Reuters. Yet Alex Baldock, the chief executive of the approximately $12 billion retailer, warned shoppers to expect higher prices on smartphones and laptops later this year, adding that it was too early to say how large the increases would be, Yahoo Finance reported.
The crunch on budget smartphone memory costs shows no sign of easing ahead of the all-important autumn launch season, when new iPhone pricing will set the tone for the rest of the market.